Item 5 Fees and Compensation
Seneca Capital Management and its affiliates that serve as general partners to the Advisory Clients are generally
compensated for advisory services through an asset-based management fee (the “Management Fee”) and
acquisition fees (each, an “Acquisition Fee”) for each asset acquisition (“Acquisition”), and affiliates of Seneca
Capital Management may receive performance-based compensation in the form of an incentive allocation or
carried interest (as described below).
The Management Fee payable by the Funds is generally based on a percentage (generally 2% per annum) of called
capital contributions. The Management Fee is typically payable quarterly in advance, commencing on the date on
which capital contributions are formally accepted into a Fund.
Upon the closing of each Acquisition, the Adviser (or its affiliates) will receive an Acquisition Fee currently
equal to 3% of the full purchase price of the asset (including the amounts of any debt assumed or borrowed in
connection with the Acquisition).
Seneca Capital Management and its affiliates may be eligible to receive a percentage of investment proceeds
currently equal to 20% or 25%, depending on the Client, of profits subject to payment of a Preferred Return
and the return of all Capital Contributions (the “Manager Promote” or “Carried Interest”).
Affiliates of Seneca Capital Management may serve as the construction management and development company
for certain real estate portfolio investments. Such affiliates will be entitled to receive compensation for such services
pursuant to construction management agreements with Seneca Capital Management or its affiliates. The
construction management agreements will be on terms and conditions that are commercially reasonable and
substantially similar to those that would be available in an arm’s length transaction but no more than 5%. Seneca
Capital Management will adhere to its fiduciary duties to its Advisory Clients when negotiating any construction
management agreements with its affiliates. Seneca Capital Management may also engage non-affiliate third parties
to provide construction management services.
Affiliates of Seneca Capital Management may manage chattel assets for certain real estate portfolio investments.
The sale of these chattel assets will be on terms and conditions that are commercially reasonable and substantially
similar to those that would be available in an arm’s length transaction. Seneca Capital Management will adhere to
its fiduciary duties to its Advisory Clients when negotiating any sale agreements with its affiliates and these sales
will be fully disclosed in writing in the annual Audited Financial Statements or written Quarterly Investor Updates.
Under certain circumstances, the Management Fee, Manager Promote and other fees may be negotiated in the
sole discretion of Seneca Capital Management and its affiliates.
Refer to the Governing Documents for each Advisory Client for a complete understanding of how fees are paid to
Seneca Capital Management, the respective Affiliated Managers and their affiliates. The information contained
herein is a summary only and is qualified in its entirety by such documents.
The Management Fee, Acquisition Fees, Manager Promote/Carried Interest and other applicable fees are
generally paid directly from the assets of the relevant Advisory Client.
An Advisory Client will typically be responsible for certain expenses, including, but not limited to, expenses
incurred in connection with the formation of that Advisory Client and admission of its investors, including,
without limitation, legal fees, registration fees and filing and recording charges, fund administration, fund audit
and other expenses reasonably incurred on behalf of the Advisory Client.
Each Advisory Client may create one or more entities to hold real estate portfolio investments. Such holding entities
may pay (and thus, the Advisory Client may indirectly pay) an affiliate of Seneca Capital Management or a non-
affiliate third party for property management services. The amounts of such fees may vary from investment to
investment depending on, among other things, the nature of the real estate property, but Seneca Capital Management
expects that such property management fees are not expected to exceed 8% (eight percent) of the monthly rental
income of a particular holding entity. Seneca Capital Management has an expectation to contract with M. Shapiro
for the existing and future properties in the Fund portfolios at a contracted rate between 4% (four percent) to 5%
(five percent).
Refer to the relevant Governing Documents for each Advisory Client for a more detailed discussion of the
expenses borne by that Advisory Client and its investors. The information contained herein is a summary only
and is qualified in its entirety by such documents.
Management Fees paid by Advisory Clients are paid quarterly in advance. The Acquisition Fees are paid at the
closing of each acquisition. The Manager Promote/Carried Interest is typically paid when earned.
Neither Seneca Capital Management, nor any of its supervised persons accepts compensation for the sale of
securities or other investment products.